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Key Workforce Challenges: More Severe in Oregon's Rural Areas
by Nick Beleiciks, Gail Krumenauer
Published May-20-2014

Oregon's job situation has improved in recent months as more people are finding work, but the recovery has been far from ideal. We have profiled Oregon's key workforce challenges at the statewide level in other articles, but many of these challenges are more severe in rural Oregon. This article looks at several key workforce challenges in Oregon's 25 non-metropolitan counties.

Unemployment is Persistently Higher in Rural Oregon
Persistently high unemployment has long been a challenge for rural Oregon. Unemployment rates in non-metropolitan counties were already higher at the onset of the recession than they were in the metropolitan areas (MSAs). The unemployment rate for the combined non-metropolitan counties was 6.4 percent in December 2007, 1.7 percentage points above the Portland area's unemployment rate of 4.7 percent, and 1 percentage point above the 5.4 percent unemployment rate in the combined metro areas of Bend, Corvallis, Eugene-Springfield, Medford, and Salem (Graph 1).

More than four years after the end of the recession, unemployment rates for Oregon's rural counties remain significantly higher than pre-recession levels. The non-metro unemployment rate was 8.5 percent in March 2014, 2.3 percentage points above the Portland area rate of 6.2 percent and 1.2 percentage points higher than the other combined metro areas' rate of 7.3 percent.

Graph 1
Unemployment rates higher in non-metro counties
Structural Changes Hit Rural Oregon Especially Hard
Structural changes in a region's economy occur when technology, trade, or policy changes alter the fundamental structure of industries within the region. When these structural changes lead to large job losses, it creates structural unemployment that can persist even through an economic recovery. This is because some workers who lost their jobs may not have the skills needed by growing industries. It takes time for displaced workers to retrain for new jobs or to move to where jobs are available.

The most challenging economic structural change faced by rural Oregon has been the reduction in logging jobs, and the shift away from wood product manufacturing jobs. In 1979, roughly two out of three manufacturing jobs in rural Oregon belonged in wood product manufacturing. By 2010, wood products accounted for one out of three rural manufacturing jobs. The mix of Oregon's manufacturing jobs shifted away from "traditional" manufacturing jobs in non-metro areas to manufacturing jobs in the metro areas, many of which require workers with completely different sets of skills. In 1979, Oregon's metropolitan areas - including counties that would become MSAs in later years - accounted for about seven out of 10 manufacturing jobs. Now, about nine out of 10 jobs in manufacturing is in a metropolitan area.

Slower Job Growth in Rural Areas
Structural change and the recession, among other factors, have worsened the problem of slow job growth in rural Oregon. The state's non-metro counties experienced far slower employment growth than their metropolitan counterparts over the past two decades (Graph 2). For the combined non-metro counties, employment rose each year throughout the 1990s, and the number of jobs grew 19 percent from 1990 to 2000. However, this rate was still far below that of metro areas. The number of jobs in the Portland area grew 33 percent during the 1990s, while the other combined metro areas grew 29 percent.

The disparity between non-metro and metro employment growth rates continued to grow during the 2000s. Non-metro counties' employment grew 24 percent, adding 61,000 jobs from 2000 through their pre-recession peak in 2007. The Portland area gained 305,000 jobs (42%) over the period, and employment in Oregon's other combined metro areas increased by 155,000 jobs (45%).

Like all areas, rural Oregon lost a lot of jobs during the recession. In 2013, non-metro Oregon as a whole finally experienced slight job growth. However, many of the individual non-metro areas of Oregon continued to experience job loss through 2013 and total employment remains well off the pre-recession highs.

The challenge of slower job growth in Oregon's rural areas isn't likely to end soon. In fact, employment projections for the 10-year period between 2012 and 2022 show generally slower growth for rural areas than for metropolitan areas (Table 1). Each of the six workforce areas with the fastest projected employment growth include a metro area, while the five areas with the slowest projected rates of employment growth are comprised entirely of non-metro counties.

Table 1
Slower Job Growth Projected for Oregon's Rural Areas, 2012-2022
  2012 2022 Change Percent Change
Multnomah and Washington 695,300 809,800 114,500 16%
Clackamas 138,630 160,830 22,200 16%
Crook, Deschutes, and Jefferson 73,620 85,760 12,140 16%
Lane 142,300 164,000 21,700 15%
Marion, Polk, and Yamhill 183,200 208,700 25,500 14%
Douglas 34,350 39,170 4,820 14%
Gilliam, Hood River, Sherman, Wasco, and Wheeler 26,230 29,810 3,580 14%
Jackson and Josephine 100,010 113,080 13,070 13%
The Oregon Consortium - Oregon Workforce Alliance 292,240 328,500 36,260 12%
Benton, Lincoln, and Linn 96,970 108,740 11,770 12%
Clatsop, Columbia, and Tillamook 35,100 39,210 4,110 12%
Klamath and Lake 24,030 26,740 2,710 11%
Baker, Union, and Wallowa 18,080 19,800 1,720 10%
Morrow and Umatilla 35,130 38,400 3,270 9%
Grant, Harney, and Malheur 17,550 19,060 1,510 9%
Coos and Curry 27,790 29,740 1,950 7%
Graph 2
Job growth in the Portland area and other metro counties combined
Younger Workers Leaving Rural Areas
The slow job growth in rural counties leaves fewer opportunities for the unemployed and for younger workers getting started on their career paths. Young workers everywhere were damaged by the recession, but the youth population itself was damaged in many rural areas.

Between 2000 and 2010, the number of young Oregonians between the ages of 15 and 24 grew 8 percent statewide. At the same time, the number of people in that age group actually declined in 14 Oregon counties, all of which were rural. Two rural counties experienced the greatest declines: Grant County lost 22 percent of its young people and Wallowa County lost 21 percent. The decline also reached double digits in Sherman (17%), Wheeler (16%), Gilliam (16%), and Crook (12%) counties. Fewer job opportunities explain part of this shift, but the aging population of rural areas also leaves fewer families with children in that age group.

Rural Workforce is Older and Heading to Retirement
The population of Oregon's rural counties tends to be older than the population of metro areas. The statewide median age is 38.4 (one-half of all Oregonians are at least 38.4 years old) while the median age is over 50 in five rural counties - Curry, Gilliam, Grant, Wallowa, and Wheeler.

The older population of rural counties means their workforces are also older. Statewide, 22 percent of workers in Oregon were at least 55 years old in 2012. In 18 of Oregon's 25 non-metropolitan counties, at least 25 percent were 55 or older (Table 2). The oldest example is Wheeler County, where more than one out of three workers is at least 55.

Although people are working far longer than they have in previous generations, it's probably safe to assume that most workers would like to retire eventually. It could be a challenge to keep the same level of economic activity going unless rural counties can attract new workers.

Table 2
Rural Counties Have Higher Shares of Workers 55 and Over
Area Number of Workers 55 and Over Share of Workforce   Area Number of Workers 55 and Over Share of Workforce
Oregon          352,549 22%        
Wheeler                   107 35%   Josephine             5,238 24%
Wallowa                   761 33%   Union             2,175 24%
Lake                   559 30%   Benton             8,115 24%
Curry                1,707 29%   Klamath             4,797 24%
Lincoln                4,598 29%   Linn             9,200 24%
Grant                   542 29%   Lane           32,533 24%
Gilliam                   215 28%   Jackson           17,817 24%
Harney                   545 28%   Marion           31,143 24%
Coos                5,479 27%   Hood River             2,715 23%
Tillamook                2,101 27%   Malheur             2,934 23%
Morrow                1,041 26%   Yamhill             6,941 23%
Clatsop                3,822 26%   Columbia             2,062 23%
Baker                1,274 26%   Umatilla             6,450 23%
Douglas                7,980 25%   Polk             3,833 23%
Wasco                2,438 25%   Clackamas           30,769 22%
Sherman                   142 25%   Deschutes           11,808 21%
Crook                1,255 25%   Multnomah           90,989 20%
Jefferson                1,407 25%   Washington           47,064 19%
Quarterly average employment for 2012.
Source: U.S. Census Bureau, Local Employment Dynamics
Challenges More Severe in Rural Areas
The majority of projected job openings in all areas of the state between 2012 and 2022 will be due to retirements. If trends continue as they have over the long term - older workers retire and young people leave - Oregon's rural counties could have trouble finding enough replacement workers, and businesses in these areas could face increased difficulty in finding skilled workers.

All areas of Oregon face several common workforce challenges, including high unemployment rates, slow job growth, and an aging workforce. These challenges are even more severe and more pressing for rural areas. While recovery gains momentum in metro areas, addressing the workforce needs of rural areas continues to be one of Oregon's key workforce challenges.